5. Our Strategy
2005/2006 2009/2010 2011/2012
2007/2008
Adequate Global Sales & Value Added
Global Production
Financial Distribution Products &
Platform
Structure Platform Branding
South America Fresh Products
South
Debt for America North America
Cooked Products
Working Minced Products
North Australia Cured Products
Capital America European Union Ready to Eat
Products
Equity Australia
Asia Case Ready
Products
to Russia
Global Brands
Finance European Africa
Marketing
Union
Growth Middle East Investments
- Access to raw material - Integrate the sales and - High technology
- High liquidity level. distribution platform to investments to produce
supply globally.
- Debt equalized to cash serve efficiently, local and value added products.
- Leader in countries with
generation. external markets, small - Increase value added
surplus production.
- Strong cash position. retailers, food processors, products portfolio.
- Scale.
- Access to international restaurants, and other - Customized products to
- Leader in exports globally.
capital markets to finance customers globally. each market.
- Access to all meat
growth. - Sales force distributed over - Convenience to consumers
markets. the globe.
- Development of long term day to day.
- Exchange of best - Efficiency on selling the best
financing plan. - Brand and Quality
practices. product, to the best market,
- Use of export platform to recognition and leadership.
- Efficiency cost gains. with the best price. - Marketing investments to
grow.
- Cost reduction - Cost reduction on sales and be present in consumer
- Hands-on working capital
opportunities. transport. minds.
management.
- Margin improvements. - Margin improvements. - Margin improvements. 4
6. Our Strategy
50%
Branding
Value
Added
Products 12%
Sales &
Distribution 8%
Platform
Production Platform 4%
Consolidated
Cost Reduction, Average
Financial Experienced Productivity, Risk
EBITDA
Structure Management Process Management Margin
Optimization
Foundation 5
8. Global Market
Largest beef producers Largest beef consumers
Others Others
United States United States
31% 31%
21% 22%
Brazil EU-27
15% 15%
India
4% Mexico
4%
Argentina
Argentina
5% EU-27 Brazil
China 5% China
14% 13%
10% 10%
Largest beef exporters Largest beef importers
Others
25% Brazil United States
23% Others 19%
38%
Russia
16%
New Zealand
Australia
7%
19%
Canada
7% India South Korea
Japan
8% United States 4% EU-27
Mexico 10%
11% 8%
5%
Source: USDA 2009
7
9. World Population Growth and Beef Consumption
(1960 – 2050)
140
10000 Population growth, a beef
consumption driver.
120
8000
100
Consumption (million tons)
Population (million)
6000 80
60
4000
40
2000
20
0 0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010* 2015* 2020* 2025* 2030* 2035* 2040* 2045* 2050*
Population - Developed countries Population - Developing countries Beef Consumption**
Source: UN (United Nations) and USDA
*UN Estimates
**Beef consumption trend considering CAGR of 2.0% (from 1960 to 2008) 8
10. Per capita food consumption (Kg / Year)
180
1969/ 71
160 1979/ 81
1989/ 91
140
1999/ 01
120 2030
2050
100
80
60
40
20
0
Cereals Roots and Beans, Peas Sugar O ils Crops Meat Milk and its
Tubers and Lentils and its products
products
Source: FAO
9
11. US Beef and Veal Exports (Million Pounds)
Source: USDA ERS
10
12. US Pork Exports (Million Pounds)
5,000
4,667
4,500
4,000
3,500
3,142
2,995
3,279
3,000 2,667 2,650
2,500 2,650
2,181
2,000 1,717
1,560 1,612
1,500 1,278 1,287
1,000
500
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Japan China Hong Kong Mexico Russia Canada South Korea Australia Others Until August
Source: USDA ERS
11
13. US Poultry Exports (Million Pounds)
8,000
7,109
7,000
6,070
6,000 5,738
5,333 5,367
5,138 5,013
4,980 4,942 4,997
5,000 4,621
4,683 4,621
4,000
3,000
2,000
1,000
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Russia China (Mainland) Iraq Mexico Canada Cuba Other Chicken Others Until August
Source: USDA ERS
12
16. Highlights
• Net profit of R$151.5 million in the quarter.
• 7.8% net revenue growth, from R$7,771.5 million in 3Q08 to R$8,379.9 million in
3Q09.
• Operating cash flow of R$317.8 million in the quarter.
• Despite relevant productivity gains in international operations, the impact of the
global crisis in important consumer markets resulted in margin contractions.
• Efficient working capital management.
• Announcement of the association with Bertin S.A. and acquisition of Pilgrim’s Pride
Corp.
• Commitment to respect society and the environment supported by Non-governmental
organizations.
4
15
17. JBS Consolidated Net Revenue Distribution
Revenue Distribution by Business Units 3Q09 Revenue Distribution by Market 3Q09
Italy
Australia 5% Argentina
14% 2%
Exports
Brazil
Pork USA 24%
17%
12%
Domestic Market
Beef USA 76%
50%
Source: JBS Source: JBS
16
18. JBS Consolidated Exports Distribution
Exports Distribution 3Q09
JBS Exports 3Q09
US$ 1,127.4 Million
Others Japan
Indonesia 18% 19%
3%
China E.U.
4% 12%
Russia
South Korea USA
Mexico 9%
4% 8%
7%
Hong Kong
5%
Africa and
Middle East Canada
6% 6%
Source: JBS
17
20. Currency effects in the net revenue
Net Revenue (Million)
• Excluding the exchange rate effect in
R$ US$ the period, net revenue increased 0.6%
Exchange rate
over 2Q09.
average of the period:
2Q09 – 2.0748
3Q09 – 1.8677
-9.5% 0.6%
Source: JBS
Source: Banco Central
19
22. Debt
• The net debt / EBITDA ratio increased from 2.6x in 2Q09 to 3.3x in 3Q09, reflecting
the EBITDA decline when compared with 3Q08.
• The company projects a reduction in leverage levels by the end of the year.
• The gross and net debt reduced 5.6% and 2.2%, respectively, over 2Q09.
Net Debt / EBITDA Pro Forma per Quarter Gross debt Profile (R$ million)
5,971.8 6.226.4
5,877.1
3.3 *
2.5 2.6 53% 61%
2.3 59%
2.0
47% 41%
39%
3Q08 4Q08 1Q09 2Q09 3Q09 1T09 2T09 3T09
Short term Long term
Source: JBS
Net Debt/ EBITDA EBITDA pro-forma
* LTM including Smithfield Beef pro-forma.
21
23. Operational Cash Flow
• For the second quarter consecutive, the Company generated positive operating cash flow
of more than R$300 million.
CAS H F L OW 3Q09 2Q09 V ar.%
E B IT 210.3 296.6 -29.1%
tax es -66.1 -90.4 -26.8%
NOP L AT 144.1 206.2 -30.1%
Depreciation 81.6 87.4 -6.7%
Gross Cash F low 225.8 293.6 -23.1%
W orking Capital V ariation 326.5 316.5 3.2%
CAP E X -234.4 -288.0 -18.6%
OP E R AT ING CAS H F L OW 317.8 322.2 -1.3%
22
24. Working Capital
JBS continues to reduce its working capital needs, which decreased from 37 days in 2Q09 to 33
days in 3Q09.
2º Quarter 2009
Client’s order Product Client’s payment
to JBS Delivery to JBS
Production & Stock
CLIENT = 37 days
21 dias
SUPPLYER = 21 days 37 days
Supplyer
WORKING CAPITAL &
payment
INTERESTS
3º Quarter 2009
Client’s order Product Client’s payment
to JBS Delivery to JBS
Production & Stock
CLIENT = 33 days
21 dias
SUPPLYER = 21 days 33 days
Supplyer
WORKING CAPITAL &
payment
INTERESTS
23
25. Final Considerations
• Signs of economic recovery bring the prospect of better results in coming quarters.
• Turnaround of Argentine operations is under way with the change in management
and the implementation of internal restructuring.
• JBS maintains its focus on building a distribution platform to add value to its products
and increase its margins.
• The undergoing acquisition of Pilgrim’s Pride and the association with Bertin adds to
the growth potential of the company.
• Financial leverage continues to be our focus and we aim to keep it under control.
• We are committed to building a sustainable platform respecting our customers and
the environment.
24
27. DISCLAIMER
The forward-looking statements presented herein are subject to risks and uncertainties. These
statements are based on the beliefs and assumptions of our management, and on information
currently available to us.
Forward-looking statements are not guarantees of performance. They involve risks, uncertainties
and assumptions because they relate to future events and therefore depend on circumstances that
may or may not occur. Our future operating results, financial condition, strategies, market share
and values may differ materially from those expressed in or suggested by these forward-looking
statements. Many of the factors that will determine these results and values are beyond our
ability to control or predict.
Forward-looking statements also include information concerning our possible or assumed future
operating results, as well as statements preceded by, followed by, or including the words
''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,''
''estimates'' or similar expressions.
26
